Why Real Estate Deals Are Canceling Across the U.S. and Hawaii | Condo Market Trouble?

According to Redfin, one out of every seven home purchase contracts has fallen apart recently. Wait, why are we quoting Redfin? I'm going to come to that in a second. But according to that statistic, that's going to be the second highest on record. And that's not a surprise to anyone that's been following along because in today's video, we're going to dive deeper. I'm going to show you some of the research that I've did on my own. And while you can't rely on Redfin and Zillow and some of these national trends that everyone's quoting, I think they use a lot of that for clickbait, but I'm going to use that as a barometer that we're going to stick around. We're going to dive into some of the local data here on Oahu. We're also tracking how different segments of the market are performing and where conditions are shifting faster than others. Let's take a look behind the scenes on how things are performing nationally and locally. Okay, back to that earlier statistic by Redfin, one out of every seven deals is falling apart. And that's basically a 14.3% cancellation rate. And what's crazy is that's the second highest on record, like I mentioned earlier. And what's a little bit concerning is this is typically going into the strongest time of year, spring and summer, even though we're in Hawaii, are typically really strong seasons for both buyers and sellers. On Oahu, actually, we're starting to see similar signs with deal attrition and deals falling apart. We're going to dive into those numbers here shortly. Redfin also reported that new listings are up 8.4%, which is the highest they've seen in the past three years. And on the same note, housing wire is seeing an increase with 38% of active listings actually having a price reduction. And then year over year, inventory is up 32% across the nation, according to Altos Research. Now, that might sound like a red flag, but there's more nuances than that. Pending sales are down in many markets across the country. However, new mortgage applications are up 2% and they're actually up 18% compared to the same time last year. So what we're seeing right now is some buyers are stepping out. Meanwhile, other buyers are stepping in. And it all just depends on price and terms. If there's a good deal out there, there's deals that are happening. If you're listing your home, price and presentation still matter. However, it does take an understanding of which segment of the market that you're competing in. The market still has a silver lining for buyers right now. With more listings and fewer active buyers, you're more likely to find a seller that's more motivated, especially in categories where inventory is stacking up. Price drops are everywhere and we're starting to see more homes with assumable mortgages. And one silver lining in this market is VA assumable mortgages. That could be a great opportunity for buyers to take on a lower interest rate than today's, say, 7% interest rate. And if you want a list of those assumable mortgages, feel free to reach out and email me at davidhawaiihomelistings.com. So we're still selling homes out there every week. It's just that this market isn't what it used to be and it's not coming back overnight. Okay, now let's break it down by property type. I pulled all the data here on Oahu for deals under contract a year ago compared to today. And for single family homes, believe it or not, we're actually up. A year ago, the numbers of deals under contract were at 258. In this past month, we're at 260. Meanwhile, on the condo front, the deals under contract a year ago, we had 507. And this past month, we're at 422. That's a drop of 16.7%. So what's compounded on that, we're going to get into that. On top of this is condo inventories picking up. So right now, the market's not a one size fit all. There's something happening different in the single family homes versus the condos. And that's the key point I want to drive home here. Not all properties are performing the same. And what it really comes down to is your unique location, presentation price, number of bedrooms, bathrooms, etc. Real estate is always local. Okay, good old Redfin is forecasting a 1% drop in national home price by the end of the year. We'll see if that comes true. I'm not betting my life on it, that's for sure. While some markets may be holding steady, others might be seeing more of a noticeable decline in some areas and in certain property types. Like we talked about earlier, the condo segment isn't quite as strong as the single family homes here in Oahu. And meanwhile, mortgage rates continue to hover around 7%. If that continues to hold, we'll continue to see buyer hesitation and caution and longer days on market. When we zoom in locally, we're seeing big differences based upon the neighborhood we're in. I did a complete breakdown of what neighborhoods were up recently. I didn't go into the ones that were down. But if you want specific areas where you see corrections and you think there's opportunity there, feel free to reach out. I'm going to post something here regarding to that local market update I covered recently. And then once again, supply, let's talk about supply. I covered this in my overall monthly market report in that condo supply is up 60% from a year ago. So compounded with, you know, there being less deals under contract, inventory is up. So it's like, it's like a double edged sword in a sense, for condos. And we've been talking about this for many months now, there's a trifecta that's been happening in the marketplace here. First of which is condo insurance, but that is starting to rebound. Second of which is fire protection with ordinance 19-4. I've made videos on both of these. And then the third of which is old cast iron plumbing within high rise condos that's starting to go bad over time. So those three factors and a fourth might be a lack of buyers from overseas with a stronger US dollar. So that's all creating pressure on the condo market. But it's creating great opportunities for buyers, which I've talked about as well. I did a video on that. I'll post that up here as well. So there's a gap, you know, in definitely a buyer's market now in the condo segment, but there's some condo buildings that are still hot. So always in real estate, things are local, depending on your building, neighborhood, zip code, etc. If you feel you've learned something new today, feel free to like this video and subscribe to my channel. And then my team and I are experts in this market. And we're here to help navigate you through because every segment of the market is different, like we just talked about. And our unique selling proposition here at Hartford's Island Real Estate is in addition to traditional home selling, we offer a platform that nobody else in the state of Hawaii is offering. That's going to be our non distressed auction platform. And if you're looking to sell your home at the highest price in the shortest amount of time, I'd be glad to have a chat with you about that because it's something like I said, it's a tool that we have in our toolshed that no else has here in Hawaii. If you want a custom breakdown for your specific home or even a neighborhood that you live in and you want to track and you have no interest in selling right now but you want to know what's going on, feel free to reach out and give us a shout at 808-371-3509. Mahalo and have a great day.